Last year, when Ukriane army perform a success attack and Russia willing to negotiate, Europe and US told the Ukriane keep fighting because it is chance to take Crimea back. Today, US has decide to place a bet on the other side, Europe still put the hope in Russia Economy breakdown, that is unconvincing.
The national wealth fund has been run down. Its 242 tonnes of gold are being sold (to Russian citizens), I think. Some of its yuan reserves are being sold, I imagine.
I have read that revenue above 60 USD per barrel from crude sales was added to the NWF, so replenishing it. With Russian crude selling below 60 USD a barrel, that replenishment must have ceased some time ago. When the gold has gone... it has gone. No more money from gold for the government to draw on to pay its bills. When the foreign currency reserves have been sold, same thing. I believe that title to a number of state-owned companies is also held in the NSW. Let me suppose that title to Russian railways is held in the NWF. I guess Putin could sell to an oligarch friend for a knockdown price. He might sell all the state-owned companies.
The point is that Putin is selling Russian state assets to finance a war that the country cannot afford. When they have all gone, how will he find the cash to continue spending much more money than the state is receiving from taxes, crude sales etc? He is already forcing banks to buy bonds, stripping those funds away from industry and consumers. I won't be surprised if he converts citizens' bank deposits into bonds. Yes, more cash to spend on the war but citizens need rubles to buy goods or services in Russia. You can't pay the garage that repaired your car or the supermarket where you bought food or your rail fare to get to work with government bonds. Garages, supermarkets, railway companies pay their suppliers, their employees, their taxes in rubles, not bonds.
I think that Europe putting hope in the Russian economy breaking down is eminently justifiable.
